The Australian economy has been variously described as 'miracle', 'remarkable' and 'the envy of the OECD.'
But while its performance may well have been miraculous, the cause has more to do with hard work and sound economic management, rather than divine intervention.
The demand for continued economic stability as well as the need for greater international competitiveness has ensured that prudent economic management is foremost on Australia's agenda.
Major reforms to the labour market, business taxation and competition policy, accompanied by strong productivity growth and low inflation have driven Australia's economic performance.
This has been backed up by the development of a highly skilled and multicultural workforce, sophisticated IT and R&D infrastructure, high tech adaptation and innovation, competitive business costs and an efficient regulatory environment.
The end result has been the creation of a more open, stable and globally competitive economy with the ability to respond to global trends and pressures.
Surprising the World
The Australian economy has time and again surprised international observers with its performance and its remarkable resilience to the Asian economic crisis of 1997 and the recent global downturn.
Australia's average annual GDP growth of 3.3 per cent since 1990 has exceeded almost all other OECD countries, including the US, the UK, Canada and Germany.
It comes as no surprise that the World Competitiveness Yearbook 2002 has rated Australia's economy as the world's most resilient--highlighting its economic performance, stability and potential.
The OECD's forecast growth for Australia in 2003 is 3.2 per cent, compared to an OECD average of just 1.9 per cent. The outlook for Australia in 2004 is even better, with growth forecast to increase to 3.8 per cent.
In response, international investors are taking note--global foreign direct investment inflows to Australia more than tripled in 2002, against a 17 per cent decline in flows to all OECD countries.
According to Australia's Federal Treasurer, Peter Costello, Australia's economic performance is a direct result of a combination of stable prices, a sound fiscal position, low public sector debt, strong financial systems and healthy employment growth.
The US Federal Reserve has singled out the Australian economy as one of the few to have lifted productivity growth in recent times, noting that its growth rates have been higher than those recorded in the G7 countries over the last decade. Indeed, Australia's productivity growth reached a high of 3.8 per cent in 2002, compared with the OECD average of just 2 per cent.
The Chair of Australia's Productivity Commission, Gary Banks, highlights Australia's ability to take up and invest in new technologies so as to 'tap new productivity potential' as one of the reasons behind Australia's performance.
As a vote of confidence in Australia's financial system, the international credit rating agency Standard and Poors upgraded Australia's credit rating to 'AAA' in 2003. This follows a similar upgrade by Moody's in 2002. Moody's said that the country also benefits from stable politics, a market oriented regulatory regime and a pragmatic policy stance.
Resilience in Diversity
Australia's strong and diverse economy has provided a buffer to global fluctuations.
Much more than a resource economy, services industries are the main stimulant of economic activity and make up almost 80 per cent of GDP.
While traditional industry sectors continue to flourish, new sectors such as information and communications technology and biotechnology demonstrate leading edge capabilities.
Australia is also well positioned to supply high value, sophisticated services, such as education, health and financial services.
In fact, education is one of Australia's fastest growing services exports with around 18 per cent of tertiary students attracted from overseas. …